Workers prepare for the opening of a gymnastics center at Bethany East, a Central Phoenix shopping complex that has emerged successfully from the recession.

Peter O'Dowd for NPR

Originally published on October 25, 2011 4:00 am

Last fall at troubled strip mall in Phoenix, a few brave business owners opened in a virtually empty complex called Bethany East during a decidedly bad economy. In March of this year, the center fell into foreclosure and new buyers stepped in. It's been a turbulent year on this corner, but things are finally looking up for the tenants.

The upswing is apparent at Zipps Sports Grill, which was an empty shell in the shopping complex during last year's World Series — just another unused space on Phoenix's distressed real estate market. But this year a sizeable crowd takes in October baseball at the new restaurant.

Operations Manager Jeremey Higgins says Zipps poured its first beer in the spring. It brought this corner a jolt of life it hadn't seen in years.

"If you came for the playoff game for the [Diamondbacks] on ... Friday night, the whole entire parking lot, including places you shouldn't be parking, was completely full," Higgins says.

The turnaround at Bethany East has been fast. In August a gym moved in, followed by a nursery and a gymnastics center. There's also a new barber and a yogurt shop, and another restaurant is on the way.

In the rougher times, there were days when Claudine Dimitriou, owner of a spa in the complex, feared she wouldn't make it.

"You have to be honest as a business owner; you never really know how it's going to work out, even with all of this," she says.

Dimitriou opened her day spa last December when the pocket-sized storefront was practically alone in this complex with room for about 18 tenants. As the building languished in foreclosure and eventually changed hands, Dimitriou was left wondering if she made the right decision.

And who wouldn't worry? Dimitriou invested her entire life savings of $80,000 into the business. Today, the complex is almost full. All that extra foot traffic might help her turn a profit by Christmas. With so much on the line, she had to survive.

Dan Mercer, who works for the commercial real estate firm Grubb & Ellis, tips his hat to the small shops that stayed afloat without a large anchor tenant to draw customers.

"It's close to impossible," he says.

Shopping centers like this usually need that anchor, he says, and without it they suffered during the downturn. Each quarter since 2007, vacancy rates have inched up to nearly 17 percent among shopping centers in the Phoenix retail market, but there's a reason why little shops may have held on — and it has something to do with location, of course.

"Rooftops drive retail but you've got to have people in those rooftops," Mercer explains.

In other words, if the Bethany East shopping center were farther out in the suburbs, it would not be doing as well. The center is actually just a few miles from downtown, and these denser urban areas are more attractive to big tenants.

But to sign the 21,000-square-foot gym or the million-dollar sports bar, the landlord still had to offer months of free rent and money for renovations. Mercer says those incentives are critical.

But the little guys, like Richard Hancharik won't get as much help. He opened a yogurt shop about a month ago and like others here he used a huge portion of his personal wealth to get it running.

"To do it right, you're looking at about $200,000," he says.

The landlord offered some money to remodel but it was a fraction of Hancharik's investment.

"This is all on the owner, and I think that's why I respect, and I get respect from the other ... small business owners, because they have to do the exact same thing,"Hancharik says.

In fact, you'll find coupons for his yogurt at the gymnastics center and gym members get a discount at the day spa. In this economy, these entrepreneurs know they'll need allies and more optimism to survive another year.